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How To Pick The Best Full Service Stock Broker

By Jason Markum

I am a stock picking machine! I read a company’s annual report, a read the balance sheets and income statements and other financial statements, I read the Wall Street Journal from cover to cover every single day, and in my spare time I watch Bloomberg television which is one of the best financial news stations on the planet. Heck, I also listen in on quarterly financial calls that the companies make with their investment bankers!

Then, when I have all my information lined up, and I know I’ve made a great decision about a new stock to pick I go out and I buy it! Some time usually goes by and then….stock starts to drop.

It happens every single time… the fact of the matter is, for all my effort, I’m just really really bad at this! And I studied finance and economics at one of the better private colleges in America! I have training specifically in this area! But it doesn’t matter, I still stink at it!

So what am I to do, and what are you to do when, like me, your investment decisions go badly? The only option may be for you to hire a full service stockbroker. These people are paid to give you advice to help you pick the stocks that will perform the best overtime.

Many people don’t understand what a full-service brokerage firm can do for them, so I thought I’d write a short little article to describe some of the things that you can expect from them.

First of all you should expect advice. They will be full of investment ideas and if those ideas are any good they will be tailored to your specific style and investment needs. They may even give you advice on creating financial plans like an accountant would.

Second they can give your research, lots of research. The largest brokerage firms spend millions of dollars every year on in-house research that they will make available to you. These are great if you want to stay up-to-date on the companies you invest in or the specific industries that they work in.

Third they will offer you other investment products besides stocks. This might include municipal bonds, tax shelters, zero coupon bonds, mutual funds, real estate investments, and even some insurance like annuities and the like. Some firms will even offer you things like free checking and money market accounts and most firms will allow you the opportunity to borrow money against your investment account (called margin trading).

There is one big thing that you absolutely have to keep in mind before choosing any full-service stock brokerage firm and that’s this… all stockbrokers make money solely on whether or not you buy or sell a stock. The more stock you buy and sell, the more commissions they make. This means that they have a vested interest in getting you to buy and sell as much stock as possible which may not be the best investment strategy for you. Be sure to keep this in mind for choosing any stockbroker.

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